Today we’re excited to release our interview with Michelle Long where we dive into how to build a referral based cpa firm! She’s an established author (five books and counting!), sought after speaker, Founder of Long For Success LLC and Co-host of the Ultimate Accounting Vcon.
In this interview you’ll learn:
1. How Michelle was able to raise her prices year over year (and how you can do the same)
2. Common traps new firms make when starting out
3. Examples of firms successfully niching down
4. How to strategically think about building your referral base
5. and so much more…
Interview Summary :
Many new firms want to make their prices competitive to “pay the bills”, but that is the wrong way to look at it. You must look at your firm or practice, no matter how small, as a fully fledged business. Which means, as you grow, you will encounter more expenses (staffing, rent, etc). Billing low will leave you overworked and unable to grow.
Michelle values herself, her work, and her time. If potential clients see your rates as high, then those are the clients you don’t want. You want clients who see the value in your service and see that you value yourself.
Envision the type of service you would like to provide to the type of clients you desire. Set your mindset to be who you want to be: The trusted advisor. At the end of the day, it is all up to you to do what you want to do for your career and for your business.
Step 1: Focus on Doing The Work You Love!
Building the foundation of a thriving business is predicated on doing the work you enjoy.
Sure, when you first begin it may be impractical to be too selective in doing only what you like to do. You have to pay the bills after all.
You might start out as a general practitioner, but do not stop thinking about the activities you enjoy and the industries that interest you.
As you grow your business capabilities and skill-sets over time, you realize how you have been gravitating towards certain types of industries or sub-sectors. Embrace it and continue boldly in that direction. The work will follow and your business will thrive.
“And this took me a while. You know, I took on everything and I finally realized I absolutely hated doing taxes...And it finally dawned on me, if I’m the boss in my practice, why am I doing something I hate doing? And that’s when I decided, ‘you know what, I’m not doing taxes anymore.’ And it opened a great opportunity for me to do what I enjoy which was focusing on QuickBooks Consulting, and set up, and training.”
When focusing in the direction you desire, you become that go-to-person. Then all of a sudden, you are THE expert in that area. You have the experience, and you have the credentials, and then you get to determine what kind of work you do and what clients you want.
Step 2: Niching Your Business Focus
As you first start out in this industry, it is understandable that you want all the clients and all the work you can get. You will take anything to kick-start your practice. But as your practice grows, Michelle asks you to consider more carefully what is the right client for you.
In thinking about it, she poses these questions to you:
- Do I want this type of client?
- If so, do I want to accept them individually as a client?
- Should I charge more for my services with this client?
- Or even - should I fire this client?
Michelle says to niche down as you grow.
For those clients that do not operate with business ethics, fire some of those clients, urges Michelle. Protect your reputation and your integrity. “Our reputation is so extremely valuable. We have to protect it at all cost.”
And now you can have a better command of the fees you charge. You are the boss, and you are in control.
Step 3: Set your prices or rates every year:
The business fee you charge is an ongoing item you address yearly. Set the expectations and clearly communicate this point to your clients. You are growing in your experience: Adding services, improving your knowledge, and offering more pointed advice to the business. And that translates to providing incremental benefits to your clients.
One of the ideas that Michelle recommends is to increase your rates every single year.
She says “On January 1, your rates should go up, otherwise, what happens is you quickly realize, you know, it has been 3 to 5 years and now you need to make a big jump and clients don’t like that so increase them every year. The cost of living goes up every single year and employees get a raise every year. Shouldn’t you get a raise too?”
She continues by saying “If we don’t value [our services and what we are providing], the client is not going to value it.”
If you are only competing on price it is going to be a race to the bottom and nobody really wins.
“We don’t want to be Walmart where we got the lowest cost. Yes you might lose some clients when you raise your rates or by having higher rates...They are not the type of client you want anyway and this is something hard to learn when you are first starting out. But if all the client cares about is how cheap is it, they are going to be nickel and diming you forever and as soon as somebody cheaper comes along, they are going to be leaving, they are not going to value the services that you are providing.”
With technology today, it does not matter if you are based in rural Indiana or metropolitan Chicago. You can base your rates on your value and can provide that value remotely to whomever is your right client.
Do not let anything hold you back from actually positioning yourself as valuable.
And how do you set your prices to reflect your competitiveness?
Michelle recommends checking out www.longforsuccess.com as a useful guide to learn about actual average billing rates. Here you can find that latest survey that shows if your prices are in the ballpark or if they are too low.
“That helps to give you an idea, and I think if I remember right, the average rate for Accounting Professionals that weren’t certified, I believe it is $65 an hour. I think it is $75 an hour for people who are certified. But then there are people that are way above that, charging $150 to $250 an hour because they’re specialized and they got that expertise. That’s a good resource.”
If you are doing good work for your clients and charging the right rates, your clients will be happy with your overall services. A content client who trusts you ultimately leads to quality referrals for your business to grow.
Step 4: Think Strategically About Building Your Referral Base
You are the trusted business advisor to your clients. You deal with their sensitive financial information and help them make important financial considerations. “And that’s why a referral is the number one most effective” thing for your business to grow, Michelle believes.
Network with other professionals in other fields and build referrals with them. Word of mouth is very powerful and the best way to build a referral based cpa firm.
Develop relationships with business professionals such as bankers, attorneys, insurance agents, and real estate agents. Get to know them and let them get to know you.
Share with them the services you provide and what is an ideal client for you.
When looking to build your referral network, look at the complementary services and products in your business niche. Reach out to others who specialize in the industry. If your niche is interior design, connect with marketing professionals who specialize in interior design or attend networking events directed at interior design
Do not overlook networking online. “More and more people now are starting to network online, just like they do in real life,” Michelle notes. Network through LinkedIn groups, which Michelle says is a good business-to-business resource, or through Facebook.
“It doesn’t have to be a live conference if you can’t afford that. We’ve got the virtual conference. You can still do the networking with people. But you got to get out there and get talking to people and develop those referral relationships!”
The power is in your hands to make your CPA business work for you and actually build a referral based cpa firm.